Gartner, Inc. (NYSE:IT) reported disappointing fourth-quarter 2018 results, with earnings and revenues missing the respective Zacks Consensus Estimate. However, the metrics improved on a year-over-year basis.
Adjusted earnings of $1.20 per share missed the consensus mark by 5 cents but increased 3% on a year-over-year basis. Earnings were within the guidance of $1.18-$1.34.
Revenues of $1.089 lagged the consensus mark by $4 million but improved 7% year over year on a reported basis and 9% on a foreign currency-neutral basis. Revenues were within the company’s guidance of $1.07-$1.12 billion. Adjusted revenues, excluding divested operations, totaled $1.088 billion, up 10% year over year on a reported basis and 12% on a foreign currency-neutral basis.
Gartner, Inc. Revenue (TTM)
Strength across a majority of segments drove the top line. Total contract value was $3.2 billion, up 11% year over year on a foreign currency-neutral basis.
Shares of Gartner have gained 15.5% in the past year, significantly outperforming 4.6% rise of the industry it belongs to.
Quarterly Numbers in Detail
Revenues at the Research segment increased 15% year over year on a reported basis and 17% on a foreign currency-neutral basis to $797 million. Gross contribution margin was 68% in the reported quarter.
Revenues at the Conferences segment increased 18% year over year on a reported basis and 19% on a foreign currency-neutral basis to $196 million. Gross contribution margin was 52%.
Revenues at the Consulting segment grew 12% year over year on a reported basis and 14% on a foreign currency-neutral basis to $96 million. Gross contribution margin was 28% in the reported quarter.
Adjusted EBITDA, excluding divested operations, increased 6% year over year on adjusted as well as foreign currency-neutral basis to $211 million. Adjusted EBITDA margin contracted 30 basis points (bps) to 19.4%.
Operating cash flow totaled $45 million and free cash flow was $7 million in the reported quarter. Capital expenditures came in at $62 million.
2018 Outlook
Management projects revenues in the range of $4.22-$4.32 billion, whose mid-point of $4.27 billion is below the current Zacks Consensus Estimate of $4.29 billion. Adjusted EPS is anticipated in the range of $3.82-$4.19. below the Zacks Consensus Estimate of $4.20.
Adjusted EBITDA is projected in the range of $720-$765 million. Operating cash flow is anticipated between $542 million and $582 million while free cash flow is expected in the range of $455-$485 million.
Zacks Rank & Other Key Picks
Gartner currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader Business Services sector are General Finance Corporation (NASDAQ:GFN) , Omnicom Group Inc (NYSE:OMC) and Paychex, Inc (NASDAQ:PAYX) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected EPS (three to five years) growth rate for General Finance, Omnicom and Paychex is 11%, 6.9% and 8.8%, respectively.
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Gartner, Inc. (IT): Free Stock Analysis Report
Omnicom Group Inc. (OMC): Free Stock Analysis Report
General Finance Corporation (GFN): Get Free Report
Paychex, Inc. (PAYX): Free Stock Analysis Report
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